Online business order remains in infancy

09:15, October 24, 2011

The dispute between thousands of small and medium-sized businesses and the online shopping giant to which they are attached, reveals the weakness of the law when it comes to e-commerce.

Last week, immediately after Taobao Mall, the country's largest business-to-consumer platform, announced an up to 10-fold increase in service fees next year, thousands of small business owners united to protest online by buying up products from big sellers and then asking for refunds after giving them negative feedback.

As the protest intensified, the Ministry of Commerce was forced to intervene and it urged Taobao Mall to actively respond to the concerns of the small merchandisers.

As a result, Taobao Mall announced on Monday that it will postpone raising its annual service fees for its registered sellers and put forward a 1.8 billion yuan ($282.2 million) investment plan to aid the development of small and medium-sized enterprises.

Taobao is clearly determined to bring order to, and upgrade the quality of, Taobao Mall, which has been repeatedly accused of selling fake and counterfeit products, in an effort to stay ahead in the country's ever-expanding e-commerce market.

But Taobao's strategy of shifting the focus from the consumer-to-consumer platform, Taobao Marketplace, to Taobao Mall and the quality upgrading of the latter should not be at the expense of small enterprises.

Since its establishment, Taobao has been a haven for small and medium-sized startups and entrepreneurs starting from scratch thanks to its knockdown membership threshold.

And the efforts of tens of thousands of small sellers have contributed in no small way to Taobao becoming China's largest e-commerce platform.

The desire of small venders to stick up for their interests is understandable, however, their actions in venting their wrath against innocent businesses should not be condoned.

It is perhaps not surprising that such a dispute has erupted, as e-commerce is still in its infancy in China and the country still lacks sound and fully market-based commercial rules.

But e-commerce is thriving and has been playing an important role in boosting domestic demand and creating more job opportunities, both of hich are major concerns of the government. Therefore, defusing the dispute also can be seen as a test, as well as an opportunity, for all the players involved to iron out problems and establish fair market rules.

Establishing effective rules to ensure a healthy e-commerce environment is in the interests of big and small businesses, online consumers and society.

The government should play a role in helping small businesses, but only if there is no violation of market rules.